Airbnb and similar sites hide fees from customers. People are mad about it

An Airbnb logo during Airbnb Open LA in Los Angeles. Some of the service’s cleaning fees are as costly as a nightly rental, with one reaching $2,500.

Photo: Mike Windle / Airbnb 2016

Juan Herrera, a graduate student from San Diego, was searching the Airbnb booking site for a place to rent in Los Angeles for New Year’s Eve when he was surprised to see that several extra fees were added to the nightly rate, pushing the total cost of the trip out of his price range.

In addition to the nightly rates of $100 to $120 for a private room, nearly every place he considered renting charged a “service fee” of about 13% of the pretax rate and a one-time “cleaning fee” of about $45. It prompted him to instead book a comparably priced hotel room.

“I definitely felt surprised and preferred to book a regular hotel because I do not feel now that Airbnb is transparent with prices,” Herrera said.

Properties listed for rent on Airbnb routinely charge cleaning and other fees, some substantial, but such extra costs seldom are factored into the nightly rate that turns up in the initial lodging search, according to an analysis of listings by the Los Angeles Times.

Now, lawmakers and consumer groups are pressuring Airbnb, Vrbo and other short-term rental platforms — as well as conventional hotels — to include all mandatory charges such as cleaning and service fees into the advertised nightly rate so that prospective customers can accurately compare prices.

The European Commission reached an agreement with Airbnb last year that requires the online booking platform to advertise the total price of booking lodging throughout Europe, which means adding all mandatory fees into the nightly rate. A bill introduced in September in the U.S. House of Representatives would impose similar requirements for all short-term lodging in the United States, including hotels and home-sharing services such as Airbnb.

Advertising the full rate “shouldn’t be hard to do,” said Anna Laitin, director of financial policy for Consumer Reports, which endorsed the legislation by Reps. Eddie Bernice Johnson, D-Texas, and Jeff Fortenberry, R-Neb. “There are ways to do it and do it well.”

The bill, titled the Hotel Advertising Transparency Act, is awaiting a vote in the House Energy and Commerce Committee.

“The Hotel Advertising Transparency Act applies to all listings for short-term lodging; this means that short-term rentals like those found on websites like Airbnb and Vrbo are subject to the same provisions in this bill that hotels and motels are,” Johnson said.

An Airbnb spokeswoman said the booking site shows both the nightly rate, without fees, and the full price, but only after guests plug in the number of days they plan to rent lodging.

“We are fully committed to price transparency and display both a nightly price and a fee-inclusive total price in our search results,” Airbnb spokeswoman Mattie Zazueta said. “We are always working to improve our customer experience and welcome the opportunity to work with lawmakers on this important topic.”

Home sharing gained popularity primarily because such lodging, ranging from a single room to an entire house, was typically offered for a much lower rate than rooms at traditional hotels. But Airbnb customers have begun to complain on social media sites that short-term rental hosts have become increasingly misleading by advertising nightly rates that don’t include the extra fees that are added once it’s time to book the stay.

“If I’m comparing prices of different places in a specific area, it’s very misleading because you don’t see all the extra fees like the cleaning fees until you go to reserve it,” said Jonah Lupton, who runs a Boston-based painting company. “Dozens of times I’ve gone to reserve a place only to see the cleaning fee and get annoyed because it’s ridiculously high.”

The cleaning fees are among the highest charges added to most short-term rentals. In some cases the fees can be nearly as much as the daily rate.

The Times analyzed more than 40,000 Airbnb listings in Los Angeles provided by Inside Airbnb, a site that collects information from the Airbnb booking site. The Times’ analysis found that 83% of the short-term rentals charged a cleaning fee, which typically ranged from $5 to $1,500, with one fee at a sky-high $2,500.

Among the Airbnb listings that included a cleaning fee, the median nightly rate was $115 and the median one-time cleaning fee was $75.

The cleaning fee was as high or higher than the nightly rate in 13% of the listings in Los Angeles, according to the Times analysis. At least a thousand more listings charged a cleaning fee that was only $10 less than the amount of a night’s stay.

Because cleaning fees are almost always charged only once per stay, the cleaning costs are a bigger hit for customers who book only one night than those who book for several days.

Extra fees for short-term rentals have become the norm because they allow hosts to attract customers with what appears to be a low nightly rate, said Linchi Kwok, an associate professor at the Collins College of Hospitality Management at Cal Poly Pomona.

“Only after the consumers click on a specific listing, then they can see the price structures that show the breakdown of the total cost, including the expenses for the stay, cleaning fee, service fee and occupancy taxes and fees,” he said. “As a result, many people may not pay attention to how much they end up paying for the fees.”

That explains why a “penthouse resort” in downtown Los Angeles was advertised on Vrbo.com recently for $199 a night but actually costs $369 when the $95 cleaning fee, $34 service fee and $41 lodging tax are added.

On Airbnb.com, an “oasis in Venice beach” was advertised for $99 a night but actually costs $253 when the $125 cleaning fee and $29 service fee are added.

According to Airbnb, hosts who advertise a property on the booking service must collect a standard service fee of about 13% of the total pre-taxed price, which pays for the operation of the Airbnb site. The Vrbo.com website says it charges a service fee that “may change from time to time.” Both platforms also collect a transient occupancy tax from renters in areas where such a tax is required.

But neither of the two booking services regulates how much property hosts are allowed to charge for other costs or services such as cleaning, parking, hosting a pet or checking in early.

If such fee gripes sound familiar, it’s because airlines faced criticism about a decade ago when many air carriers began to advertise fares that did not include many fees, including to check luggage. The outcry prompted the U.S. Department of Transportation in 2011 to adopt a rule that required all airlines to include in the advertised price any mandatory fees, including taxes.

Hotels have also been the target of consumer outrage in recent years for adding resort fees as high as $100 a night. Attorneys general for Nebraska and the District of Columbia have filed lawsuits over resort fees, and at least one travel website has begun charging a commission on resort fees charged in Europe to push hotels to be more transparent about their prices.

Matthew Kiessling, a spokesman for the Short Term Rental Advocacy Center, a coalition that includes property owners, managers and short-term rental hosts, said he is aware of the proposed legislation in Congress but declined to comment on the bill or to talk in general about transparency in short-term rental rates.

Several Airbnb hosts who were contacted by the Times via the booking service declined to comment or requested that their names not be published.

The host of a townhouse in San Pedro (Los Angeles County) that rents for $220 a night, plus a $280 cleaning fee, $65 service fee and $70 in “occupancy taxes and fees,” responded to questions about transparency in rates by saying “Airbnb lets people know what the cost will be so I don’t really see an issue.”

Still, online forums for Airbnb hosts show that hosts have vastly different approaches to fees, particularly for cleaning.

“I used to charge a cleaning fee but have recently changed my rates to price more like a hotel and roll the cleaning fee into the nightly cost, in order to average it out over each night for the month,” wrote one Airbnb host.

But another host on a similar forum said charging a cleaning fee allows the host to attract renters with what appears to be a low nightly rate.

“Yes, my daily rate is lower because I charge a cleaning fee and I get lots of hits and bookings,” the host wrote. “Do not raise the price, lower it and raise the cleaning fee.”